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Military guards its finances ahead of drafting new constitution - Daily News Egypt

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Military guards its finances ahead of drafting new constitution

By Reem Abdellatif CAIRO: The ruling military council warned civilians not to “interfere” in the military’s businesses underlining that these ventures have been created from the “sweat” of the Ministry of Defense. The Tuesday announcement came shortly after members of the Supreme Council of Armed Forces, headed by de facto president and field Marshal Hussein Tantawi, …


By Reem Abdellatif

CAIRO: The ruling military council warned civilians not to “interfere” in the military’s businesses underlining that these ventures have been created from the “sweat” of the Ministry of Defense.

The Tuesday announcement came shortly after members of the Supreme Council of Armed Forces, headed by de facto president and field Marshal Hussein Tantawi, sat down with 18 political parties to discus the drafting of the country’s first constitution.

While the military rarely speaks of its finances, Major General Mahmoud Nasr, the deputy defense minister for financial affairs and a member of the ruling military council, defended the military’s businesses, this time stressing that they are not for civilian oversight, according to local media.

“They will never allow this to happen,” said Ziad Akl, senior analyst at the Ahram Center for Political and Strategic Studies. “It has been very clear; this is simply further reassurance that the army will maintain its special status in the upcoming constitution,” he added, referring to Nasr’s recent comments.

The military council’s punitive comments are a direct result of their Tuesday discussions with political parties and liberal members of parliament, Akl explained.

The meeting came as an ongoing crisis over the makeup of the Constituent Assembly unfolded. About 25 members have walked out of the Assembly in protest of the domination of Islamists of the body tasked with drafting the constitution.

“It has been a question whether or not the parliament will have oversight of the military’s budget as well,” said Akl.

If the Constituent Assembly reached consensus, the People’s Assembly could oblige the military to present a transparent budget of the army’s businesses, which include projects in infrastructure and food products.

However, if approved, the military may present the parliament with a very “limited” budget report.

“This is what could happen, but it is highly unlikely that this will receive consensus,” Akl told Daily News Egypt.

The army is expected to maintain the secrecy shrouding the part of the economy it controls. In previous talks with political powers last July, a constitutional document was proposed with articles giving the army and its budget special status. Although the document was rejected, it’s expected that the military will push for similar powers in the new constitution.

“The real military budget will remain undisclosed, the military is not going to lead the country for one and a half years and try to instill the image of ‘the people and the army are one hand’ in the public’s minds, then come out of this losing,” he said.

Since the army assumed power after Mubarak’s ouster, activists and many political parties have constantly called for more transparency regarding the army’s stake in the economy, which is expected to constitute anywhere between 15 to 40 percent of Egypt’s overall GDP.

In the unusually detailed defense of the military’s economic ventures, which include factories and hotels, Nasr said the businesses’ annual revenues were LE 1.2 billion ($198 million).

Nasr said the military’s enterprises were meant to allow the army to become self sufficient and complied with financial and tax regulations.

“This is a sincere and honest effort for which we pay taxes. Whoever targets it would be targeting Egyptian national security,” he said, according to Al-Shorouk.

Nasr said one of the armed forces holding companies, the National Service Project Organization, yielded about $1.3 billion in profits between 1990 and 2011, according to his comments in the same paper.

NSPO includes four main companies working in manufacturing of canned foods and drinks, the bottled water and olive oil company, an Optronics company and a chemical and agriculture products company.

He also denied that the military, which dissidents suspect of angling to stay in power even after the planned transfer of power to civilian rule, was “a state within a state.”

He said the businesses also compensate for the small percentage of the budget allotted to the military, adding the military receives only 4.2 percent rather than its “deserved” 15 percent of the budget.

According to reports by local media, Nasr added that the military has loaned the state up to LE 2.35 billion, about $389.1 million, this past year, while contributing up to LE 12.19 billion, about $2 billion, to the economy over all since 1952.

The details of the army’s defense spending, however, have never been revealed to media or the Egyptian public. The only figure Egyptians know is traced back to the roughly $1.3 billion received from US in annual military aid and even that is not widely discussed in local media.

“We don’t know details. It is not our domain; it is a political decision,” said Magda Kandil, executive director of the Egyptian Center for Economic Studies.

The argument in Egypt after the Jan. 25 uprising is that in order to establish a truly democratic state, transparency is essential in all aspects of society, especially business.

“The more transparency there is in the economy, the better, instead of living in corruption allegations due to secrecy,” said Kandil.

Kandil told DNE that she believes the military controls 20 to 40 percent of the Egyptian economy.

Military projects, however, include luxurious hotels all over Egypt in touristic areas such as the Red Sea, Alexandria and Cairo. The army also produces Safi bottled water as well as jams, pasta, oil, canned goods, jeeps and car parts. It’s also involved in agriculture.

All such projects have large revenues, which allegedly go to a “special fund” for the military, Kandil pointed out.

“I can’t estimate exactly how much stake the army has in the economy; it has always been confidential. The parliament of the country has never known,” said Monette Doss, senior financial analyst at Prime Group.

“Everything now regarding the former system, however, is seen as questionable by the people,” she reiterated.

When police forces completely retreated during the 18-day uprising, many civilians welcomed the army’s presence in the streets.

Since then, however, the relationship between the army and the people has somewhat soured due to violent confrontations, costing the country lives of about 100 civilians.

Activists have targeted the military business ventures, at times calling for a boycott of its products or questioning economic data provided by the generals. –Additional reporting by agencies.

 

 

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